SMC Limited v Ketina Zembe

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT
NO LC/H/218/13
HELD AT HARARE 3RD JUNE 2013
CASE NO
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IN THE LABOUR COURT OF ZIMBABWE			JUDGMENT NO LC/H/218/13

HELD AT HARARE 3RD JUNE 2013				CASE NO LC/H/781/11

SMC LIMITED						Appellant

KETINA ZEMBE						Respondent

Before The Honourable G Musariri, President:

For Appellant		Mr L Mazonde, Advocate

For Respondent		Mr Piki, Attorney

MUSARIRI, G:

On 15th November 2011 the Honourable P Shawatu made an arbitration award.  In terms thereof he ordered Appellant to pay Respondent an amount of US$28 783.00 as damages in lieu of reinstatement.  Appellant then appealed to this Court against the award.  Respondent opposed the appeal.  Both parties filed extensive Heads Of Argument.  They both appeared before the Court led by their counsel.

Appellant’s argument was in two parts.  The first was titled “In Limine” and the second was styled “On the Merits.”

In Limine

The argument were summarised as follows:-

The arbitrator lacked jurisdiction to entertain the matter on the basis that reference to arbitration was fatally flawed.

The arbitrator misdirected himself at law in entertaining and making an award on an issue that was not in his terms of reference and therefore not properly before him,

in that he entertained and made an award on Respondent’s claim for a higher salary than she was contractually receiving in circumstances where his sole term of reference was to determine whether or not Respondent’s employment had been lawfully terminated.

The arbitrator further misdirected himself at law in making an award on an issue/matter which was not in his terms of reference in that he ruled on a remedy in circumstances where his terms of reference did (sic) include same or require or permit him to do so.

The arbitrator misdirected himself and erred at law in varying the initial award on an issue he had already determined in circumstances where he was functus officio.

I noted that each of the grounds above related to the procedure used by the arbitrator.  It did not relate to the merits of the case.  Indeed it could not do so in light of the separate set of arguments on the merits drawn by Appellant.  I pressed Appellant’s advocate for his position on this score.  I did not get a satisfactory response.  In fairness to him it is noted that the Heads were not drawn by him but by the instructing attorney.  In terms of section 89 (1)(di) of the Labour Act Chapter 28:01 (hereafter called the Act), this Court has been given “the same powers of review as would be exercisable by the High Court in respect of labour matters.”  Accordingly the grounds of review, well-articulated as they were by Appellant, cannot be raised in the appeal in casu.  They required a separate application for review for their ventilation.

On The Merits

Appellant summarised its arguments under this title as follows.

The Arbitrator grossly misdirected himself on the facts which misdirection amounts to a misdirection at law in that he failed to appreciate and give proper weight to the fact that the parties had agreed the termination of Respondent’s employment per se and that the only outstanding issue was the severance package.

6.1 	The arbitrator misdirected himself at law in awarding two remedies of back pay for 19 months amounting to US$18 544 and damages for loss of employment for 18 months amounting to US$17 658.

6.2 	The arbitrator gravely and grossly misdirected himself at law in basing back pay and damages for loss of employment computations on a salary of US$976 per month in circumstances where the purported salary was alien to the contract of employment between the parties.

6.3	The arbitrator misdirected himself at law in that,

a)	he failed to apply the principle that the dismissed employee should mitigate her damages;

b)	he failed to take evidence on and determine the period in which the Respondent would with due diligence have found alternative employment;

c)	having found that the Respondent had prospects of finding alternative employment within a reasonably short period of time he proceeded to award grossly unreasonable compensation of an aggregate of 37 months in back pay and damages for loss of employment.

That the parties intended to settle the matter by mutual agreement is beyond doubt.  Filed of record is a document titled “Mutual Termination Of Contract Of Employment...”  It cites the names of Appellant and Respondent.  It lastly stated that the parties  shall negotiate a termination package which should be concluded on or by 31st May 2011.  But the document was not signed.  Clearly the parties did not agree a mutual termination.  Next to the document is Appellant’s letter dated 26th February 2011 addressed to the Ministry of Labour titled “Unfair Labour Practice”.  The letter is what apparently triggered the conciliation process and subsequent arbitration.  The Reference to Arbitration Form LR4 date stamped 25th July 2011 is filed of record.  It recorded the subject for arbitration as “Unfair Termination Of Employment.”  It ties in with Respondent’s complaint of an unfair labour practice.  It was drawn by the Conciliator.  In any event such officer is empowered in terms of section 98 (4) of the Act to “determine the arbitrator’s terms of reference...”  In these circumstances I am persuaded that the real issue between the parties at both conciliation and arbitration was

the termination of Respondent’s employment by Appellant.  If such was found to be unfair a remedy was called for.  The question of a “severance package”  by mutual agreement fell away when agreement thereon proved elusive.

Whether the award of both back pay and damages was a misdirection has been conclusively answered by precedents from the Supreme Court.  One such is the matter of

Olivine Industries v Nharara 2006 (1) ZLR203 (S)

where Cheda JA, as he then was, stated that (at p206E)

“It was, therefore, correct to order that Respondent be awarded back pay from 4 July 1997, together with interest.  The back pay

and benefits would represent what the Respondent should have received had he not been wrongfully dismissed.

In additional  damages, the award should take into account the period he should have taken to obtain alternative employment.”

(The underlining for emphasis is mine.)

Clearly an employee who has been unfairly dismissed is entitled to both back pay and damages.  In any event an employer aggrieved by the resultant quantum due, has the option of reinstating the employee to avoid the damages portion of the payment due.

As regards the actual calculations, the arbitrator took a robust view of the matter.  Respondent claimed it would take her 5 years (60 months) to secure alternative employment.  Appellant argued it would take 6 months.  The arbitrator discredited Respondent’s claim on this point as unreasonable.  He determined that a period of 18 months was appropriate.  Precedents show such periods ranging from 1 year (12 months) to 3 years (36 months).  A finding of 18 months in the circumstances cannot be termed as grossly unreasonable.  This was obviously based on the arbitrator’s expertise and experience in dealing with these matters.

The rate used in the calculations of back pay and damages was based on Respondent’s claim.  Appellant did not provide proof of how much it was paying for Respondent’s former grade at the time of the arbitration.  This left the arbitrator in a quandary .  Consistent with his robust approach, he took the view that since Respondent used to earn above NEC rates, her claim being above such rates, it was

acceptable.  No attempt was made to cite the applicable rates or Regulations.  Perhaps the arbitrator was over-robust on this point.  It is apparent that there were rates set by the NEC.  Such should have been spelt out.  If Respondent earned a certain percentage above the rates then that should have formed the basis of the calculations.  As it is, the rate used (US$976) appears like a thumb-suck by Respondent.  The arbitrator ought to have interrogated that figure or at least ascertained the NEC rates in order to determine an appropriate rate.  Accordingly I shall remit the matter to the arbitrator but only for a recalculation of both the back pay and damages using a rate linked to NEC rates.

Wherefore it is ordered that,

The arbitration award made by the Honourable P Shawatu dated 15th November 2011 (as amended) is hereby set aside; and

The matter is remitted back to the arbitrator only for the re-calculation of back-pay and damages in light of the comments in the last paragraph of this judgment.

G MUSARIRI

PRESIDENT